Amazon Tax

California Legislators Push New Internet Sales Tax Bill to Thwart Amazon.com Referendum

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What games the Democrats in the California Legislature play to impose or collect new taxes.
A group of California legislators plans to pass a new online sales tax bill in a move to thwart tax opponent Amazon.com.

Lawmakers today used a “gut-and-amend” procedure that takes an existing bill and substitutes an online sales tax measure. The bill passed the Senate Appropriations Committee today.

In late June, Gov. Jerry Brown signed a bill requiring Amazon and other online retailers to begin collecting sales tax on California transactions. The bill passed on a regular, majority vote. Amazon has refused to collect the tax and launched a referendum to have it overturned.

But Larry Levin, a spokesman for Sen. Loni Hancock, D-Oakland, said the new legislation would be different. It would pass on a two-thirds supermajority and would carry an “urgency” clause. That means it can’t be subject to ballot referendum, Levin said.

I would urge my fellow Republicans in the California Legislature to BLOCK this tax increase on California taxpayers and allow the referendum process sort out the law.

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Amazon Tax

California’s Amazon Tax Referendum Faces Epic Legal Battle

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Dan Walter’s has the story here of the challenge to the recently enacted California Amazon Internet Sales Tax Legislation.
But will the referendum run afoul of Proposition 25 – the 2010 initiative ballot measure, which public employee unions sponsored, to reduce the legislative vote margin on the budget and its trailer bills from two-thirds to simple majorities?

Before any ballot battle, the rivals are poised for a legal showdown.

The tax measure, Assembly Bill X1 28, appropriates $1,000 to the Board of Equalization for administration.

Democrats placed token appropriations in trailer bills to qualify for simple majority votes under Proposition 25, and one section of the state constitution says appropriations are not subject to referendum.

Two Democratic legislators declared Thursday that the referendum is invalid due to Proposition 25. But Amazon cites multiple declarations by Proposition 25’s supporters that it would not dilute voters’ referendum rights, plus an opinion from the Legislature’s counsel to that effect.

Last August, for instance, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez issued a statement that, if Proposition 25 passed, it “will not allow a majority of the Legislature to use budget trailer bills to enact new ‘referendum-proof’ programs or requirements,” adding, “Any attempt by this or any future Legislature to circumvent this right would be in clear violation of California’s constitution.”

The Amazon petition is now before Attorney General Kamala Harris. She could conceivably declare it to be invalid under Proposition 25, thereby triggering a legal battle with Amazon’s attorneys attacking Proposition 25’s validity.

Harris is more likely, however, to clear the referendum for signature-gathering. But if and when Amazon submits the signatures for certification, the California Retailers Association is poised to challenge them under Proposition 25.

Either way the entire matter will head to the California Supreme Court where the referendum process will be examined under the precepts of Proposition 25. Then, there will either be an election and/or a federal court challenge.

These taxes will not be collected, nor shall the California treasury be enriched for a long long time.

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Amazon Tax

Is the California Amazon Internet Sales Tax Legislation Dead?

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It is hard to say since California Proposition 25 language in the bill (tax increases requiring a 2/3’rds super majority) makes for some legal incongruity and the fact that Governor Jerry Brown vetoed the enabling California Budget bill .

Here is the bill.

ABX1 28 (Blumenfield)
State Board of Equalization: administration: retailer engaged in business in this state.

The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by sales price. That law defines a ?retailer engaged in business in this state? to include retailers that engage in specified activities in this state and requires every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state to register with the State Board of Equalization and to collect the tax from the purchaser and remit it to the board.

This bill would further define a retailer engaged in business in this state as a retailer that has substantial nexus with this state and a retailer upon whom federal law permits the state to impose a use tax collection duty. The bill would also include specified retailers as retailers engaged in business in this state and would eliminate an exclusion.

This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months, except as specified. This bill would also provide that a retailer entering into specified agreements to purchase advertising is not a retailer engaged in business in this state and would define a retailer to include an entity affiliated with a retailer under federal income tax law, as specified. This bill would further provide that these provisions would not apply if the retailer can demonstrate that the referrals wold not satisfy specified United States constitutional requirements, as provided.

This bill would also include as a retailer engaged in business in this state as a retailer that is a member of a commonly controlled group, as defined under the Corporation Tax Law, and a member of a combined reporting group, as defined, that includes another member of the retailer?s commonly controlled group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer.

This bill would provide that the provisions of this bill are severable.

This bill would appropriate $1,000 from the General Fund to the State Board of Equalization for administrative operations.

The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. Governor Schwarzenegger issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on December 6, 2010. Governor Brown issued a proclamation on January 20, 2011, declaring and reaffirming that a fiscal emergency exists and stating that his proclamation supersedes the earlier proclamation for purposes of that constitutional provision.

This bill would state that it addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation issued on January 20, 2011, pursuant to the California Constitution.

This bill would declare that it is to take immediate effect as a bill providing for appropriations related to the Budget Bill.

The lawyers will have to get together on this one but at first blush and with the solence coming from Amazon and Overstock.com, my bet is that the legislation is dead.

Thank goodness! I can keep my meager Amazon Associate status – at least for today.

Stay tuned….

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Amazon Cuts Affiliate Ties In More States Over Internet Sales Taxes

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Note well, California Legislators because if current legislation becomes law, then this will happen to your state.
Amazon has shut down its affiliates program in Connecticut and Arkansas over the controversial issue of collecting state taxes.

The company announced the move in letters to affiliates Friday, noting that contracts with all Connecticut residents who participate in the Amazon Associates Program would be terminated effective immediately, while contracts with affiliates in Arkansas will be terminated on July 24.

Affiliates of the Associates Program are typically Web site owners and bloggers who link to Amazon on their sites as a way of driving traffic to the online retailer. In return, they receive a commission if a sale is made.

Though Amazon isn’t required to collect taxes in states where it has no presence, many cash-strapped local governments have tried to force the company to pay taxes in states where affiliates are located. Amazon naturally has challenged that requirement, a move that has forced the company to shut down its affiliate programs as it fights the tax regulations.

The retailer has terminated similar agreements in other states, including Illinois, Colorado, North Carolina, and Rhode Island, and has threatened to do the same in other states where affiliates are located.

In its letters to Connecticut and Arkansas affiliates, the company blamed the budgets signed by the governors of those states that force it to collect tax from online purchases even though Amazon has no physical presence in the states. Because of the new state tax laws, Amazon said it was “compelled” to shut down the affiliates programs.

Great, it looks like I will no longer be an Amazon Associate (if and when Jerry Brown signs the legislation), although I have not realized any revenue yet. But, what about the Californians that do derive their livelihood from Amazon? Well, they lose their jobs.

While federal litigation continues, up to the United States Supreme Court more than likely, the states will add little revenue while hurting its working citizens.

In a recent interview, Amazon CEO Jeff Bezos condemned the drive to collect sales tax, arguing that Amazon is no different than big retail chains that don’t collect sales tax in states where they don’t have what’s known as a “nexus,” or presence. The CEO said Amazon’s point of view is that the collection of taxes among the states should be simplified, referring to a plan called the Streamlined Sales Tax Initiative.

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Updated: California Assembly Passes Amazon Internet Sales Tax Legislation – Lawyers Get Rich; PMA Sues Illinois Over Internet Sales Tax Nexus

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